NYC Cab Law Upheld After CU Suit Claimed Unfair Competition

Despite a lawsuit filed by several credit unions claiming unfair competition, the New York State Court of Appeals has upheld a state law authorizing the establishment of street hail livery service.

The recent decision also allows the city of New York to sell 2,000 additional medallions for wheelchair-accessible yellow taxicabs.

The boroughs affected are Brooklyn, Queens, the Bronx, Staten Island and northern Manhattan.

Last April, the Taxicab Service Association – which includes Briarwood, N.Y.-based $1.8 billion Melrose Credit Union, the $595 million Progressive Credit Union in New York, $143 million Montauk Credit Union in New York and the $248 million Lomto Federal Credit Union in Woodside, N.Y. – filed a suit seeking to invalidate the Hail Accessible Interborough License Act.

The TSA said the act was in direct competition with New York’s yellow cabs, and it authorized the mayor alone to flood the market with 2,000 new yellow cab medallions. TSA said it works exclusively with credit union lenders who finance medallions. Taxi medallions are licenses that allow for the ownership and operation of a taxi.

In its 22-page decision, the court unanimously rejected all of the plaintiffs’ arguments, according to a statement from Bloomberg’s office.

“The State law ‘plainly furthers’ important State goals, the Court reasoned, including the provision of “[e]fficient transportation services in the State’s largest City and international center of commerce,” the statement read.

In addition to the TSA, the plaintiffs included trade associations, members of the yellow taxicab industry and New York City Council Member Lewis A. Fidler.

The TSA also claimed that HAIL would devalue yellow taxi medallions and potentially trigger a credit crisis for the $5 billion medallion lending industry.

According to its suit, the TSA said New York’s Taxi and Limousine Commission had illegally begun to implement the act without a proper review of the potential impact of 18,000 street hail livery vehicles on the city's air and noise quality, traffic congestion and neighborhood character.

“With this decision, we can finally bring safe, reliable taxi service to the four and a half boroughs that don’t currently have it,” Bloomberg said in a statement.

He added, “That’s a victory for everyone who lives in, works in or visits New York City. This will also advance our efforts to make taxi service available to people with disabilities, by adding 2,000 wheelchair-accessible yellow cabs to the streets.”

The state law authorizes TLC to issue up to 18,000 HAIL vehicle licenses during a three-year period, 20% of which must be for wheelchair-accessible vehicles, according to Bloomberg’s office.

Beyond increasing the availability of wheelchair-accessible yellow taxicabs in the city, the issuance of these 2,000 new medallions should generate more than $1 billion in revenues for the city, Bloomberg’s office said.